They can be scary words to auto dealerships as they are to most businesses.

But they can be less frightening if dealerships proactively pursue resolution of consumer issues through a comprehensive regulatory compliance strategy and programs.

Lately, the concern has been generated by activity of the Consumer Financial Protection Bureau (CFPB) and its increasing level of scrutiny of consumer finance – from auto lenders to dealers.

“This increased scrutiny is not the regulation du jour – it’s here to stay,” write David Childers and Patty Covington in an article, “4 steps to CFPB Compliance,” at F&I and Showroom online. “And as ‘third parties’ to financial institutions, auto dealerships must do all they can to fill the compliance gaps, because regulators are asking tougher questions and demanding that they dig deeper to prove their compliance with an ever-widening collection of obligations.”

“What regulators are most concerned about is whether there is a ‘structure’ around compliance, and whether it is integrated into dealership operations,” Childers and Covington write.

Key areas of concern among regulators include handling of customers’ private data, credit programs and advertising practices. The writers urge dealers to “embrace CFPB’s recommendation for a compliance management system” and take action to ensure they are seen making a good-faith effort.

The four steps covered by Childers and Covington are:

Creating executive oversight – Senior management must lead the way, setting expectations for the company and its service providers, and appointing a compliance champion, “a dedicated individual or someone serving in a split role that manages the compliance mandates the board establishes.”

Establishing a compliance program – This comprises approved written policies and procedures, training, monitoring and corrective actions. “It should give accurate information to help make informed decisions about the organization’s ongoing compliance posture and activities,” the authors write.

Providing a complaint resolution program – This is necessary to “log, track, investigate and resolve complaints in a timely manner … to identify and understand underlying issues and business risks.”

Conducting objective compliance audits – The aim of an audit is to make sure the dealership’s operations are meeting legal requirements as well as the company’s policies and procedures, and, if not, that the dealership is able to take appropriate corrective action.

“The beauty of a [compliance management system] is that it can proactively address the risks relevant to your organization while meeting multiple regulatory requirements,” according to the writers. “It brings to light problems that may be symptomatic of deeper issues within a dealership. Properly administered, it can fix those issues before they explode into something more costly.”

It’s a brave new world of regulatory compliance but it doesn’t need to be as frightening as it sounds – meeting the challenge even can be an opportunity to make the business better.